The table below shows the expected rates of return for three stocks and their weights in some portfolio:
Stock A | Stock B | Stock C | ||
Portfolio weights | 0.3 | 0.2 | 0.5 | |
State | Probability | Expected returns | ||
Recession | 0.2 | 0.08 | 0.03 | 0.14 |
Boom | 0.8 | 0.13 | 0.05 | 0.15 |
1. What is the portfolio return during a recession?
2. What is the expected portfolio return?
3. What is the standard deviation of the portfolio returns?
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